What is happening in the UK mortgage industry? — October 28, 2008
In recent times there has been a lot of competition between banks and other financial institutions along with building societies. And this is not the friendly kind of competition, but something that has led to a far more serious problem. That problem is financial deregulation. The only industry that is benefiting from this is the mortgage industry. But now, this problem is hitting them back straight in their faces, as the house prices in the UK are falling.
Current account mortgages have become popular as they allow low interest payments. They allow for borrowers to combine their current account with their mortgage, and the savings in the current accounts are used to reduce the mortgage capital. Another popular scheme is the self-certification process which allows borrowers to obtain loans without giving any proof of income. This is good for the self-employed or people with variable income. Interest only mortgages are another popular product, as it is a more affordable alternative, but offers only a short-term benefit.
Mortgages have also been affected by the housing prices in the UK. Although getting a loan is easier now that financial institutions have relaxed the rules a bit. But this does not mean that the fall in housing prices is not hitting people. Every type of construction is seeing problems. In fact a lot of people have been turning to a viable option, which is building their own houses from materials such as timber frames. This provides a less expensive, yet sturdy option.